You’re considering taking on more business, but cannot wait any longer for outstanding invoices to be paid off. Taking advantage of invoice and non-recourse factoring services will help you eliminate these headaches, before they even begin.
What is Non-Recourse Factoring?
Non-recourse factoring is a type of risk-free business financing service that allows business owners to sell their outstanding invoices and receivables to get an advance up to 96% with low rates and stress free collection. Many business owners mix the definition of factoring and loans, but these two couldn’t be more different. Here are five advantages of non-recourse factoring that you wouldn’t find with any other type of business loan service.
Advantages of Non-Recourse Factoring
1. Credit Insurance
With non-recourse factoring, the factoring company takes on 100% of the risk if your clients fail to complete payment – keeping your credit score safe. This is great for small companies. Let’s say you factor over $50,000 worth of invoices with a traditional factoring company that does not offer non-recourse factoring. If your clients fail to pay, you would be responsible for paying this amount back to the factoring company, which could put you out of business. With non-recourse factoring, the factoring company would “eat” those charges, which is a HUGE benefit for your small business.
2. Free Credit Checks
With non-recourse factoring, the factoring company does not look into your credit score – they look into the credit history of your clients. Because the factoring company purchases your invoices, they need to look at the credibility of your customers to ensure their likelihood of repayment. Many factoring companies make you pay a fee for every invoice that you sell. This can result in a major cost. With our non-recourse factoring services, we give free credit checks to ensure that you are getting financing without breaking your business budget.
3. Vendor Assurance
As a start up or small company, it’s often difficult to build credit with large suppliers and vendors. For example, let’s say you are a small shoe company that just signed a 1 million dollar deal with a major department store. You call your shoe manufacturer with the order and they request a 30% deposit – which comes out to $300,000. This may not be something that you have at the moment. Our non-recourse factoring company would write you a letter of assurance, guaranteeing the payment.
4. Securing a Strong Source of Working Capital
With non-recourse factoring, you will be able to secure a strong source of working capital for growth. With non-recourse invoice factoring, you will get cash for your outstanding invoices in just 24 hours or less – rather than waiting up to 90 days to get financing from a bank. By getting cash owed to your business almost immediately, you will be able to secure a strong source of working capital for your business.
5. Improvements On Credit Score
Because non-recourse factoring will help you secure a strong source of capital, you will always have funds to make payments on time. By always having a strong source of capital for your business, you will be able to build or improve your business’s credit to easily qualify for future loan options.